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Business confidence recovering but key concerns remain: CII
Lakshmi Mittal tops UK’s richest list
Union Bank of India to focus on semi-urban, rural areas
Axis Bank Q4 net up 20%; 160% payout
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Aviation Notes
Tax Advice
personal finance
Bourses likely to be range-bound this week
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Business confidence recovering but key concerns remain: CII
New Delhi, April 29 The investment climate in India has been deteriorating since last year due to multiple factors including governance drift, delays in approvals and fear of scams. Business houses are reluctant to bet on India and the investment climate and one major worry has been several transactions are being reopened by various authorities. Given the political impasse in the country, fresh, bold reforms look unlikely at least for now, a fear that even Standard & Poor’s expressed while lowering India’s rating outlook from stable to negative and warned of a downgrade in two years if adequate steps are not taken to control the fiscal deficit, cut subsidies and move on reforms. An important point remains that instead of looking endlessly for “bold reforms” which may be stuck due to political issues, day to day decisions on the existing policies need to be taken expeditiously to give a positive feel that things are moving and are not stuck. Assocham president Rajkumar Dhoot told The Tribune what the industry and country as a whole need are “process reforms”, i.e., effective implementation of the enacted policies. Compared to a value of 62.5 in the first quarter of 2011-12, the CII index reported a value of 55.0 in April-June 2012. “Although the index value is showing a moderate recovery for the past two quarters, it remains at a depressed level and far below the levels achieved in the previous year”, said Confederation of Indian Industry director general Chandrajit Banerjee. The 79th Business Outlook Survey reveals stagnancy in reforms is the top concern of most firms, followed by high interest rates and high raw material cost. “The implementation of a few key reforms in the areas of indirect taxation, pricing of administered products and increasing FDI limits would go a long way in raising business confidence and improving the growth outlook for the economy,” according to CII. S&P has expressed the fear that major reforms are not possible due to the “political gridlock” and the fact that general elections are due in 2014 before which tough and painful reform measures may be a political hot potato. Leave aside fresh reforms, the most important decision staring at the government now is the hike/decontrol of fuel prices. S&P has pointed out some reforms that are required include reduction of fuel and fertilizer subsidies, introduction of a nationwide goods and services tax and easing of restrictions on foreign ownership of various sectors such as banking, insurance and retail. On a positive note, the CII survey reveals 47.2% of the respondents expect an increase in domestic investments in April-June 2012, while 39.1% expect them to remain stagnant and 12.4% expect them to decline. |
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Lakshmi Mittal tops UK’s richest list
London, April 29 The combined wealth of Britain's 1,000 richest people swelled by almost five percent to more than 414 billion pounds ($670 billion), the highest recorded by the 24-year-old survey, the Sunday Times newspaper said in an advance release on Saturday. Some 77 members of the 2012 rich list were billionaires, two more than the previous record in 2008. Their good fortune contrasted with the economic plight of many Britons who face five years of austerity aimed at wiping out a record budget deficit as the economy struggles to recover from the 2008 financial crisis. The three top places in the list were dominated by foreign-born magnates with a base in Britain who earned their fortunes from resource-based industries such as minerals, steel and
oil. Lakshmi Mittal retained his crown as Britain's richest man despite losing almost a quarter of his wealth over the past year following a fall in the share value of his
ArcelorMittal, the world's largest steelmaker. The Indian-born businessman saw his personal worth slide by 4.8 billion pounds to 12.7 billion pounds, but that was still enough to keep him narrowly on top of the list.
— Reuters |
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Union Bank of India to focus on semi-urban, rural areas
Chandigarh, April 29 For this, the focus will continue to be on retail banking besides upgrade of disbursement and delivery systems in these areas. A majority of the 300 new branches that the bank plans to open this year will be opened in semi-urban and rural areas. Union Bank of India chairman & MD D. Sarkar told The Tribune that in the current fiscal the bank is looking at 15-16% growth in deposits and 18-20% growth in its credit offtake. “However, the market is subdued at the moment. In order to achieve this growth, the main thrust will be on improving our CASA (current account savings account) ratio from 32% last year to 35% this fiscal. We believe the CASA ratio will improve with a renewed focus on the smaller towns and rural areas. Though we have a good presence in these areas, we are looking at further strengthening our presence here,” he said. He added the new branches in small towns and rural areas will be opened wherever there is good scope for agriculture, retail and small & medium enterprises (SME) business. In the last financial year (2011-12), the bank’s total business exceeded Rs 400,000 crore. “The bank’s net interest margin is 3.2% and we hope to maintain this in the current fiscal as well. We’re also undergoing a branding exercise for the bank, wherein we are setting up state of art branches called Union Experience Branch across 250 cities this year. In this fiscal, though the focus will be on the domestic market, we’re also looking at converting our representative offices in Sydney, Dubai and Shanghai into full fledged branches. The Sydney representative office is expected to become a full fledged branch by September this year”, Sarkar added. Union Bank of India will also be working with the Punjab government to set up a system of electronic benefit transfer, not just for the social security pensions, but also for channelizing payments in the treasury and payments to farmers for procuring their produce. “We had a meeting with the Punjab minister on Saturday and the modalities are being worked out,” Sarkar said. |
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Axis Bank Q4 net up 20%; 160% payout
Mumbai, April 29 Total income rose to Rs 7,647.94 crore in the January-March quarter compared to Rs 5,817.06 crore in the same period previous fiscal. The lender's interest income improved to Rs 6,060.32 crore during the quarter against Rs 4,366.6 crore in the same period a year ago. The bank proposed a dividend of 160 per cent, or Rs 16, per share for 2011-2012. For the entire fiscal ended March, 2012, the bank's net profit grew by 25 per cent at Rs 4,242.21 crore, compared to Rs 3,388.4 crore in the previous financial year. Total income rose to Rs 27,414.87 crore during the year, compared to Rs 19,786.9 crore in the previous fiscal. Consolidated net profit of the bank increased to Rs 4,219.78 crore in 2011-2012 compared to Rs 3,339.9 crore a year ago. The bank’s capital adequacy ratio (CAR) stood at 13.66 per cent at the end of March 2012. Meanwhile, the board of Axis Bank has also approved the reassessment of the valuation of the Enam Securities Private Ltd at Rs 1,396 crore and consequently in consideration of demerger, the bank will issue shares in the ratio of 5 equity shares of bank for every 1 equity share held by shareholders of the
Enam. — Agencies |
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Aviation Notes
The government's "open skies" policy in the 1990s saw the mushrooming of private carriers, leading to crowded skies. A decade later private airport builders entered the chaotic scene, who are now holding both airlines and passengers to ransom, and a virtual 'jungle raj' (lawlessness) now obtains in the Indian civil aviation industry.
New terminals at the Delhi and Bombay international airports are indeed spacious, but they have effectively turned into "white elephants". Passengers are denied facilities, particularly wheelchairs for the disabled, as fares on domestic routes in particular and international ones in general keep increasing with the government remaining a mute observer. The private builders' control of the country's two busiest airports is complete and decisive. Such is their influence that even the Airports Economic Regulatory Authority (AERA) is wholly towards them. With increased airport development charges and several other levies and fees, both airports have become the "costliest" in the world. The hike in fares, which will be applicable from May 15, has caused panic among passengers. "We can't afford to pay such exorbitant fares and are forced to go back to train travel", said half-a-dozen odd regular flyers. The consensus among airlines and travel agents is that all these manmade problems will further depress the Indian civil aviation sector, which is already passing through a critical phase. Minister of state for civil aviation Ajit Singh has gone on record to say that "the ministry can't intervene in AERA's decisions. Fares have been raised after talking to all". While he expressed his helplessness in the matter, he opposed the FY13 budget proposal of a four-time hike in service tax on air travel. Statistics show the builders of the two major airports sang a different tune' at the time of bidding for the contracts and are now talking tough after having constructed the terminals. The truth is that the industry is in the grip of these developers hurting the cause of civil aviation in the country. |
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Tax Advice
Q: I couldn't vacate the government residential accommodation allotted to me due to some circumstances and now I'm being charged an amount 50 times the standard rent. Can I claim house rent from the time of being charged standard/30/50 times of standard rent? Is there any provision by which I can claim tax relief from 50 times the standard rent?
— Narender Sharma A:
There is no provision in the Income Tax Act for allowing deduction of an amount 50 times of the standard rent. However an assessee can claim tax deduction for the house rent paid, subject to certain limitations as provided in Section 80GG of the Act. Such deduction is allowable under Section 80GG of the Act in respect of the rent paid by an assessee provided he satisfies the following conditions: (i)The rent paid is an excess of 10% of an assessee's total income before allowing deduction under Sec. 80GG; (ii)The rent paid is in respect of accommodation occupied for the purpose of his own residence and a declaration in Form 10BA is filed with the IT department; (iii)no residential accommodation is owned by the assessee or his spouse or minor child or by a "Hindu undivided family" of which he is a member. This condition would not be applicable where the residential accommodation is owned by the persons specified herein above, at a place other than that where the assessee resides and performs duties of employment or carries on his business or profession. The deduction is also not permissible in case an assessee has a residential accommodation at any other place but claims that the said accommodation is self occupied and a concession in respect thereof is claimed. |
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personal finance
There are several investment avenues currently available for NRIs if they want to remit or invest their funds in India. Among the many options that can be considered for investment the following are some leading ones. Deposits
There are fixed deposits of various kinds that are available for NRIs. One of them is the Non Resident Ordinary (NRO) deposits where the money can be repatriated back overseas to the extent of US $1 million per financial year subject to adherence to the guidelines issued by the RBI. Other deposits like the Non Resident External Rupee (NRE) and Foreign Currency Deposits (FCNR) deposits allow the individual to repatriate the money back abroad without any restriction. Bonds
There are also several bond issues that are being offered in India and many of these also allow nonresident Indians an option to invest in them. NRIs can ensure they are able to get good returns by investing in these instruments and they can also lock the rates for a longer time period by selecting the appropriate kind of bonds or debentures that suits their needs. Some of the examples of the type of bonds include the regular income yielding instruments or even deep discount bonds that allow for a lump sum to be received in future instead of a regular income stream. Equities
Equities represent a route for nonresident Indians to participate in the growth that is witnessed by corporate India. They can buy equity shares of companies that are listed on the stock exchanges and this represents an option where the risk reward ratio is high. There are some conditions that have to be fulfilled after which the investments can be made. Investments in direct equities fall under the Portfolio Investment Scheme (PINS). The process involves opening a bank account by the NRI through which the purchases and sale of the shares will be routed. Further the bank will ensure that the necessary RBI permission under the PINS is taken for the account. The NRI has to trade through a broker and they cannot day trade. Banks help the individual in the opening of a bank account and linking this with the online trading account of the broker as well as a dematerialized account in a convenient and customer friendly manner. Mutual funds Nonresident Indians
would also like to ensure there is adequate diversification in their portfolio and for this purpose would want to choose from a variety of options. This is possible when they invest in mutual funds that are operating in India. Mutual funds provide the benefit of diversification, professional management and easy investing. There is, however, a small restriction whereby some fund houses do not allow NRIs living in specific countries to make the investment as this might clash with some of their regulatory requirements. Other than this factor there is a wide range of options on the debt, equity, hybrid as well as gold that can be accessed either directly or through a bank. Select banks in India provide an Investment account to track and invest in mutual funds through internet banking. Real estate
Property in India has always been the preferred investment avenue for nonresident Indians. This allows them to buy a house or a piece of land in their hometown or some other place where they would want to stay either after retirement or for a part of the year. They can also buy real estate for investment purpose. There are a lot of options when it comes to the field of real estate as they can buy an apartment or a bungalow or even land that meets their requirement. The conditions regarding the purchase have to be followed just like other resident individuals. There is even financing available for them in terms of loans for the purchase of the property from Indian banks provided they meet the required condition of the institution that is financing them. Precious metals
There are options like investing in gold and silver that are utilized by a lot of people for meeting various requirements in life. Nonresident Indians can also ensure that they are able to get the benefit of this route and hence they can invest in gold jewellery or coins or bars as the need may be. Similarly there are other options that are available like silver or other precious metals that can be used for the purpose of making jewellery that can be added to the portfolio. The author is executive vice president & head, branch banking, Kotak Mahindra Bank. The views expressed are his own |
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Bourses likely to be range-bound this week
The stock markets played out as expected with the Bombay Stock Exchange benchmark Sensex losing 239.59 points or 1.38%. The National Stock Exchange Nifty fell 100.25 points or 1.89% to close at 5,190.60 points.
The broader indices all lost much more than the benchmark indices, showing widespread weakness during the week. The BSE 100, BSE 200 and BSE 500 lost 2.11%, 2.22% and 2.29%, respectively, while the BSE MidCap lost 2.76%. The BSE Small Cap lost even more at 2.94%. Among the sectoral indices the BSE Realty lost 6.09%, the BSE Cap goods lost 4.87% and the BSE PSU lost 4.10%. The BSE IT gained 1.96%. In individual stocks TCS was a big gainer with gains of Rs 116.05 or 10.65%. The losers clearly overshadowed the gainers and topping the list of losers was JSW Steel (down 9.45%), Power Finance Corp (down 9.33%), BHEL (down 7.34%), REC (down 7.29%), Axis Bank (down 6.45%), SBI (down 5.93%) and Larsen & Toubro (down 5.5%). There was a special short session of 90 minutes of trading held on Saturday, April 28, which saw the markets gaining. The Sensex gained 53.09 points or 0.31% to close at 17,187.34 points while the Nifty gained 18.40 points or 0.35% to close at 5,209 points. The week saw a very quiet expiry of April futures and they closed at 5,189 points a gain of a mere 11 points over the previous month. Ratings agency Standard & Poor's downgraded the India's sovereign rating from stable to negative while Moody's confirmed India's rating as stable. One is not sure who is correct and who is wrong but it sure makes one wonder as to what drives these ratings, political or fundamental. During the week the markets have tested key support levels and have bounced off them. The BSE Sensex hit the 17k mark providing support while the NSE Nifty saw support at 5,150 levels. These levels will act as support this week as well but in case they get broken on the downside, there could be some sharp slides. The Indian rupee continued to weaken and closed at Rs 52.54 for the week. FIIs were sellers for the week and sold on every single day of the week with net sales of Rs 2,030 crore. Domestic institutions too sold with net sales of a mere Rs 203 crore. Results from private banks - ICICI Bank and Axis Bank - have been better than expected and their stocks have recovered from their lows. It would be interesting to see how the state-owned banks perform when they start reporting their earnings next week. After the scare about the performance of IT bellwether Infosys, there was skepticism about the performance of IT companies. TCS' performance has certainly removed the short and medium term concern and was the top gainer for the week. The markets are expected to be range bound in a short week and would broadly follow global cues and individual companies based on their results. Parliament is back in session and investors would be awaiting the passing of the budget and more importantly the changes to the finance bill in respect of 'GAAR' the controversial bill regarding taxes for tax haven located companies. The BSE Sensex has support at 17,023, then at 16,954, then at 16,803 and finally at 16,659 points. It has resistance at 17,243, then at 17,379, then at 17,463 and finally at 17,664 points. The NSE Nifty has support at 5,155, then at 5,126, then at 5,087 and finally at 5,021 points. It has resistance at 5,224, then at 5,282, then at 5,342 and finally at 5,378 points. The author is founder of KRIS, an investment advisory firm. The views expressed are his own market pointers
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With the Indian economy on a long-term growth curve coupled with recent economic instability in the western world, nonresident Indians can look at multiple investment options available to them to park their funds in their home country. Compared with the returns they may generate by investing in the United States or Europe, the takings from India will be considerably higher. The investment market in India of late received a further fillip due to recent movements in currency exchange rates.
One of the ways in which nonresident Indians can use the debt routes in the country is by investing in fixed deposits of Indian banks. The Reserve Bank of India recently deregulated savings interest rates including interest rates for NRE deposits. Consequently, banks in India increased interest rates on savings bank and NRE deposits resulting in increased remittances by NRIs. Further, the depreciation of the Indian rupee (INR) has made the proposition even more attractive for NRIs.